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Reflections

Why Focus on Entrepreneurs

Entrepreneurship is the backbone of a country’s prosperity. Successful enterprises are the drivers of a nation’s wealth and employment. They generate taxes. They are the bread-makers of the breadwinners. If a country must progress fast, it should encourage entrepreneurship among its citizens, which can be achieved only through active interventions and investments – not through slogans and speeches.

Entrepreneurs are a breed apart. They have a unique mind. Each one is a unique personality. High risk-taking mindset, ambition, a vision, creative thinking, problem-solving skills, self-motivation, tenacity, determination and similar traits and skills drive them to business.

My mission in the life left for me is working for entrepreneurs. Though they have the fire in the belly, like all other human beings, they too have many “blind spots” – things they do not know about themselves, but others know.

Most have weaknesses equivalent to their strengths. While they strive hard to achieve their goals, the weaknesses pull them down. If they get the right knowledge and guidance, they can excel in their mission. As a consultant and coach, I am available to every entrepreneur who has a burning desire to achieve excellence in his or her business mission.

Why Many New Launches or Startups Fail?

Do we not hear quite often from young people these days, “I want to start my own business soon”? While I was in the UAE on a short visit, many conversations with NRIs went like this; “I want to make some money and return to my native place… and start some business.” What business? “Some business.”

On a closer look, I can see seven major reasons though we can add many more to the list.

Leadership, be it business or non-business, is the ultimate factor behind an organization’s success. It is the engine of effectiveness, efficiency and productivity. This is one of the reasons why I give a lot importance to business leadership in my consulting engagements. If this single factor is correct, many other areas of business success are automatically addressed.

Leadership is manifested as a unique behaviour; what the leader says and does? The leader may have many strengths and qualities. But what matters is the ‘demonstrated behaviour’ – communications, decisions, strategic planning, problem solving, team building, organizing resources, motivating people, developing meaningful relationships and so on.

Many men and women who jump into business with vivid dreams and high ambition demonstrate poor leadership skills. Mostly their core personality traits play a dominant role in the way they manage people and business matters. If the traits are helpful to the business, it works well. If the traits are unhelpful, there starts the downfall.

Every organization has to have a strong leader at the top where the buck stops. Even if yours is a small Startup with limited number of people, there must a strong and mature leadership to drive the idea forward to its destination.

People including corporate executives and upper middle families stand in queue on the footpath outside a small restaurant in Mumbai’s Dadar area for lunch quite often. One wonders what makes these folks queue up on the footpath in front of a small joint serving Malvani non-vegetarian food when there are grade-A to star hotels in the close vicinity. The answer lies in the taste of the food they serve. The taste is the USP that makes this hotel thrive for more than fifty years – I stood in the queue in 1984 and in 2020 also, the queue is very much there. There is quality and consistency generation after generation.

Whether it’s the story of a small hotel, the i-Phone or the BMW car, a USP is a key factor of success in business. New entrepreneurs who do not know this truth struggle with their products and services to attract customers.

Market for a businessperson is the pool of the actual and potential buyers of his products or services; it is not the place(physical) where sellers and buyers meet. A great product in a wrong market does not sell. This means the market you chose does not generate the required ‘demand’ – number of potential buyers and the capacity to pay.

Many underprepared business aspirants jump into a venture without doing proper market research. They fall in love with their own pet idea or project. After a few months of hard work, they run out of cash to sustain the work. In such cases, only a thorough research can give the supporting information to identify the potential segments, their sizes, attitudes, lifestyles and so on. Lack of thorough research before venturing into business investments is equivalent to gambling; it may or may not click.

Let me share an interesting example from the animal kingdom to drive this point home. The strategy of Cheetah to hunt its food is ‘speed’. For its survival, it has to outrun a Gazelle or Impala. To execute the strategy of speed, nature has engineered Cheetah perfectly from the nose to the tail end. In short, Cheetah has a structure perfectly supporting its strategy of speed.

Every business must build a structure supporting its business strategy. Structure refers to functional clarity, organigram, right person at the right position, clarity of roles and responsibilities, chain of command and ease of management, not undermining infrastructure.

In the absence of a proper structure, the organization gets handicapped. This means low performance, low revenue, and eventually premature death.

Marketing, including the personal selling component in it called ‘Sales’, creates demand and thereby brings ‘revenue’ to the firm. In other words, without marketing, in any form, there cannot be a sustainable revenue generation mechanism.

Every entrepreneur has a genetic or acquired skillset orientation; some are good in product development, some in operations and administration, some in finance and accounts, and a few in sales and marketing. This is not a helpful situation in the overall management of the business if the person focuses only on his area of strength. One has to be good in all the areas, because, for success in business all functions should work like a perfect orchestra. Marketing is a critical function for business success.

Look at the budget and the way BYJU’S learning application is marketed. Of course, a micro/small enterprise may not have that budget. Yet, one must find a way, beyond a simple website or brochures, to reach out to fresh prospects for creating the demand.

This is a vast area covering production, supply chain management, last mile availability, customer satisfaction, service and so on.

Take the case of a Startup in Kerala where they want to sell fresh fish and high-quality chicken through a website and mobile application. Their problems are all around operational efficiency. When a customer does not get what she picks up from the menu on the app, she loses interest in the company forever and looks for alternatives. Eventually the venture fails.

Many organizations die prematurely due to operational issues.

Cash is oxygen in business. Without oxygen, the entity gets suffocated and eventually dies.

Despite having business orders, sometimes firms run out of the working capital they need to manage essential activities. There are situations where a critical investment in a machine or technology is inevitable for survival. In both the situations, availability of cash is lifesaving for the business.

Poor cash management is one of the major causes of business failures. Enthusiastic business adventurers before venturing into business must attend a special coaching session on finance management which includes capital management, cash management, accounting, credit control, taxation, and financial ratios.

I have cited seven major reasons that came across my experience though there can be many more depending on the nature of the business one enters into. For example, physical retail business, restaurants and real estate have a critical success factor called ‘location’. If the chosen location of business is faulty, the probability of success is very low.

The Mindset of a Successful Entrepreneur

Our mindset – the mind behind our specific behaviour - is the manifestation of our personality, beliefs, values, learning, and broadly our thought patterns.

By the principle of “cause and effect”, mindset causes the effects such as character, success, achievement, happiness, wealth, philanthropy, sympathy, empathy, peace, moral values and all other virtues of life.

By the same law of cause and effect, mindset also causes fraud, scam, irresponsibility, criminality, corruption, hatred, terrorism and social violations of all kinds.

In short, mindset is the cause, and behaviour is the effect.

An entrepreneur with the ambition to build a successful venture must develop a mindset of humility, openness and learning. This is a pre-requisite without any shortcut or substitute.

Attitude, another word closer to mindset, can come to our mind at this moment. In my view, there is a larger meaning in ‘mindset’ vis-à-vis ‘attitude’. While attitude is a mental position one takes towards an idea, a thing or a person, mindset conveys a deeper and long-term perspective of behaviour. Mindset conveys a clear vocabulary in terms of its underlying constitution.

In the context of ‘mindset’, Carol Dweck, a Stanford Psychologist who wrote a remarkable book “Mindset: The New Psychology of Success” (First published in 2006 and the updated edition in 2017) stands apart. I believe the word ‘mindset’ has become commonplace after the publication of her book.

She has introduced the idea of “growth mindset” versus “fixed mindset”.

The construction of the two phrases are so apt that they convey the gist of the book even before opening it. The updated edition of 2017 covers many issues relevant to the corporate audience.

According to the researcher-author Dweck, for those who carry a growth mindset, human intelligence and capabilities are open to improvement – they are not carved on a stone; they can be developed with efforts and perseverance. In general, such people approach life with the belief that success is a product of hard work, learning and improvement. For them, failure is a call to learn more, work more, practice more and improve.

They thrive on challenges. They believe in continuous self-development. Pursuit of improvement is a natural behaviour for people with a growth mindset. In short, change is possible for them and their organizations.

A fixed mindset, as the word ‘fixed’ says, believes that human capabilities and intelligence are fixed; either you have it, or you don’t. People with a fixed mindset focus on winning, succeeding and proving themselves superior to others. If they can’t, they give up.

Though an entrepreneur’s mindset should be positive, analytical, strategic, decisive and so on, my close study of success and failures over 35 years teaches me that above everything, an entrepreneur should be humble and open to learning. Only such entrepreneurs have thrived amidst chaos and challenges.